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Exhibit
10.16
3PARdata, Inc.
MANAGEMENT RETENTION
AGREEMENT
This Management Retention Agreement (the
“Agreement”) is made and entered into by and between
______________ (the “Executive”) and 3PARdata, Inc.
(the “Company”), effective as of __________ (the
“Effective Date”).
R E C I T A L S
A. It is expected that the Company from
time to time may consider a Change of Control (as defined below).
The Board of Directors of the Company (the “Board”)
recognizes that such consideration can be a distraction to the
Executive and can cause the Executive to consider alternative
employment opportunities. The Board has determined that it is in
the best interests of the Company and its shareholders to assure
that the Company will have the continued dedication and objectivity
of the Executive, notwithstanding the possibility, threat or
occurrence of a Change of Control of the Company.
B. The Board believes that it is in the
best interests of the Company and its shareholders to provide the
Executive with an incentive to continue his or her employment and
to motivate the Executive to maximize the value of the Company upon
a Change of Control for the benefit of its shareholders.
C. The Board believes that it is
imperative to provide the Executive with certain severance benefits
upon the Executive’s termination of employment following a
Change of Control which provides the Executive with enhanced
financial security and incentive and encouragement to remain with
the Company notwithstanding the possibility of a Change of
Control.
D. Certain capitalized terms used in
this Agreement are defined in Section 4 below.
The parties hereto agree as
follows:
1. Term of Agreement. This Agreement
shall terminate upon the date that all obligations of the parties
hereto with respect to this Agreement have been
satisfied.
2. At-Will Employment. The Company and
the Executive acknowledge that the Executive’s employment is
and shall continue to be at-will, as defined under applicable law,
and may be terminated by either party at any time, with or without
cause or notice. If the Executive’s employment terminates for
any reason, including (without limitation) any termination prior to
a Change of Control, the Executive shall not be entitled to any
payments, benefits, damages, awards or compensation other than as
provided by this Agreement, or as may otherwise be available in
accordance with the Company’s established employee plans or
pursuant to other written agreements with the Company.
3. Change of Control Severance
Benefits.
(a) Involuntary Termination other than
for Cause, Death or Disability or Voluntary Termination for Good
Reason Following A Change of Control. If, within twelve
(12) months following a Change of Control, the
Executive’s employment is terminated (i) involuntarily
by the Company other than for Cause, death or Disability or
(ii) by the Executive pursuant to a Voluntary Termination for
Good Reason, then, subject to the Executive entering into and not
revoking a mutual release of claims with the Company substantially
in the form attached as Exhibit A to this Agreement, the Company
shall provide the Executive with the following benefits upon such
termination:
(i) Severance Payment. A lump-sum cash
payment in an amount equal to fifty percent (50%) of the
Executive’s Annual Compensation;
(ii) Continued Executive Benefits.
Company-paid health, dental, vision, long-term disability and life
insurance coverage at the same level of coverage as was provided to
the Executive immediately prior to the Change of Control and at the
same ratio of Company premium payment to Executive premium payment
as was in effect immediately prior to the Change of Control (the
“Company-Paid Coverage”). If such coverage included the
Executive’s dependents immediately prior to the Change of
Control, such dependents shall also be covered at Company expense.
Company-Paid Coverage shall continue until the earlier of
(A) one year from the date of termination, or (B) the
date upon which the Executive and his or her dependents become
covered under another employer’s group health, dental,
vision, long-term disability or life insurance plans that provide
the Executive and his or her dependents with comparable benefits
and levels of coverage. For purposes of Title X of the Consolidated
Budget Reconciliation Act of 1985 (“COBRA”), the date
of the “qualifying event” for the Executive and his or
her dependents shall be the date upon which the Company-Paid
Coverage commences, and each month of Company-Paid Coverage
provided hereunder shall offset a month of continuation coverage
otherwise due under COBRA.
(iii) Equity Compensation Accelerated
Vesting. Fifty percent (50%) of the unvested portion of any
stock option, restricted stock or other Company equity compensation
held by the Executive shall be automatically accelerated in full so
as to become completely vested or, if the Executive has exercised
his or her early exercise rights with respect to any stock option,
then fifty percent (50%) of the unreleased portion of the
stock option shall be automatically released from the
Company’s repurchase option pursuant to the stock
option.
(b) Voluntary Resignation. If the
Executive’s employment terminates by reason of the
Executive’s voluntary resignation (and is not a Voluntary
Termination for Good Reason), then the Executive shall not be
entitled to receive severance or other benefits except for those
(if any) as may then be established under the Company’s then
existing severance and benefits plans or pursuant to other written
agreements with the Company.
(c) Disability; Death. If the
Executive’s employment with the Company terminates as a
result of the Executive’s Disability, or if the
Executive’s employment is terminated due to the death of the
Executive, then the Executive shall not be entitled to receive
severance or other benefits except for those (if any) as may then
be established under the Company’s
then existing severance and benefits
plans or pursuant to other written agreements with the
Company.
(d) Termination for Cause. If the
Executive is terminated for Cause, then the Executive shall not be
entitled to receive severance or other benefits.
(e) Termination Apart from Change of
Control. In the event the Executive’s employment is
terminated for any reason, either prior to the occurrence of a
Change of Control or after the twelve (12) month period
following a Change of Control, then the Executive shall be entitled
to receive severance and any other benefits only as may then be
established under the Company’s then existing severance and
benefits plans or pursuant to other written agreements with the
Company, including the Executive’s offer letter with the
Company dated May 8, 2002.
4. Definition of Terms. The following
terms referred to in this Agreement shall have the following
meanings:
(a) Annual Compensation. “Annual
Compensation” shall mean an amount equal to the
Executive’s Company annual base salary at the rate in effect
immediately preceding the Executive’s date of termination
with the Company.
(b) Cause. “Cause” shall
mean (i) an act of personal dishonesty taken by the Executive
in connection with his or her responsibilities as an Executive and
intended to result in substantial personal enrichment of the
Executive, (ii) the Executive being convicted of a felony,
(iii) a willful act by the Executive which constitutes gross
misconduct and which is injurious to the Company,
(iv) following delivery to the Executive of a written demand
for performance from the Company which describes the basis for the
Company’s reasonable belief that the Executive has not
substantially performed his or her duties, continued violations by
the Executive of the Executive’s obligations to the Company
which are demonstrably willful and deliberate on the
Executive’s part.
(c) Change of Control. “Change of
Control” means the occurrence of any of the following
events:
(i) Any “person” (as such
term is used in Sections 13(d) and 14(d) of the Securities Exchange
Act of 1934, as amended) becomes the “beneficial owner”
(as defined in Rule 13d-3 under said Act), directly or indirectly,
of securities of the Company representing fifty percent
(50%) or more of the total voting power represented by the
Company’s then outstanding voting securities; or
(ii) The consummation of the sale or
disposition by the Company of all or substantially all the
Company’s assets; or
(iii) The consummation of a merger or
consolidation of the Company with any other corporation, other than
a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity or
its parent) at least fifty percent (50%) of the total voting
power
represented by the voting securities of
the Company or such surviving entity or its parent outstanding
immediately after such merger or consolidation; or
(iv) A change in the composition of the
Board occurring within a two-year period, as a result of which
fewer than a majority of the directors are Incumbent Directors.
“Incumbent Directors” shall mean directors who either
(A) are directors of the Company as of the Effective Date, or
(B) are elected, or nominated for election, to the Board with
the affirmative votes of at least a majority of those directors
whose election or nomination was not in connection with any
transaction described in subsections (i), (ii), or
(iii) above, or in connection with an actual or threatened
proxy contest relating to the election of directors to the
Company.
(d) Disability. “Disability”
shall mean that the Executive has been unable to perform his or her
Company duties as the result of his or her incapacity due to
physical or mental illness, and such inability, at least twenty-six
(26) weeks after its commencement, is determined to be total
and permanent by a physician selected by the Company or its
insurers and acceptable to the Executive or the Executive’s
legal representative (such Agreement as to acceptability not to be
unreasonably withheld). Termination resulting from Disability may
only be effected after at least thirty (30) days’
written notice by the Company of its intention to terminate the
Executive’s employment. In the event that the Executive
resumes the performance of substantially all of his or her duties
hereunder before the termination of his or her employment becomes
effective, the notice of intent to terminate shall automatically be
deemed to have been revoked.
(e) Voluntary Termination for Good
Reason. “Voluntary Termination for Good Reason” shall
mean the Executive voluntarily resigns after the occurrence of any
of the following (i) without the Executive’s express
written consent, a material reduction of the Executive’s
duties, authority or responsibilities, relative to the
Executive’s duties, authority or responsibilities as in
effect immediately prior to such reduction, or the assignment to
the Executive of such reduced duties, authority or
responsibilities; provided, however, that a reduction in duties,
authority or responsibilities solely by virtue of the Company being
acquired and made part of a larger entity shall not by itself
constitute grounds for a “Voluntary Termination for Good
Reason”; (ii) without the Executive’s
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